Chapter 8: Administration of the Estate

Question 1

what is the executors year?

Answer 1

complete administrative tasks in 1 year and begin to distribute after

Question 2

what are the 3 duties of care to the estate?

Answer 2

1. Common law duty not to commit waste (devastavit)
2. Statutory duty of care under S35/S1 Trustee Act 2000
3. Fiduciary duty

Question 3

what is devastavit?

Answer 3

to waste property etc

Question 4

what it the common law duty not to commit waste?

Answer 4

Preserve assets of the estate from waste / harm

must not unnecessarily reduce value

Question 5

When do the statutory provisions of care apply?

Answer 5

Investment
Acquiring land
Insuring estate assets

Question 6

what happens if a PR is found to waste assets of the estate?

Answer 6

personally liable to repay any loss

Question 7

what happens if there is a breach of S35/S1 Trustee Act 2000

Answer 7

personally liable to repay any loss

Question 8

what is the fiduciary duty over an estate?

Answer 8

Act in the best interests of the beneficiaries and the estate (responsibly fairly, due diligence)

Question 9

what does the fiduciary duty of a PR extend to?

Answer 9

loss and any unauthorised profit made by the PR.

Question 10

what happens if there is a breach of a fiduciary duty?

Answer 10

repay any profits made - loss is irrelevant

Question 11

How can a PR be protected from liability?

Answer 11

express working in the will

or

S61 Trustee Act (acted honestly and reasonably)

Question 12

what is an absolute duty of a PR?

Answer 12

collect any debts owed to the deceased.

Question 13

when does a debt NOT need to be collected by a PR?

Answer 13

testator expressly forgave the debt in their will

Question 14

what are the investment trustee powers of a PR?

Answer 14

Power to invest as though absolute owners of assets

Consider standard investment criteria and review investments

Obtain advice from a qualified person BEFORE exercising any powers.

Question 15

when is the standard of care higher for a PR?

Answer 15

a qualified professional e.g lawyer

Question 16

what is the duty of a PTR for investments?

Answer 16

check and review investments - make sure INVESTMENTS RETAIN VALUE.

must act positively - it is not enough to keep the same value IF it is possible to increase e.g interest accrued

Question 17

when is a trust of land automatic?

Answer 17

if an estate has any land at all

Question 18

what are the absolute ownership powers of a PR?

Answer 18

Rent out the land
Manage the rented land
Sell the land

Question 19

when can the powers of a trustee be limited?

Answer 19

express words of the testator in the WILL.

Question 20

what happens if the deceased was a sole trader?

Answer 20

fulfil any business contracts.

exception - personal services e.g labour, transport, delivery DO NOT need to be fulfilled.

Question 21

when should a PR NOT attempt to wind up/ sell a business?

Answer 21

he will expressly states to carry on the business.

Question 22

what happens if the will does not allow a PR to carry on with the business but they do so anyway?

Answer 22

any liabilities/ expenses are to be paid by the PR personally.

Question 23

when might a PR not be liable for expenses incurred by carrying on the business?

Answer 23

claims indemnity from the estate

Question 24

when will an indemnity claim from the estate be successful?

Answer 24

Specific authority to run the business (will)

In the process of releasing assets from administration

Creditor knew position and agreed to it

Question 25

what must PRs do before distributing assets?

Answer 25

identify and pay debts

Question 26

If after the debts have been paid there is not enough to pay beneficiaries what happens?

Answer 26

gifts cannot be made

Question 27

when does an estate become insolvent?

Answer 27

Debts add up to more than the estate is worth

Question 28

what happens to a deceased debts after death?

Answer 28

PRs are responsible for repayment of all deceased debts - can be asked to pay personally.

Question 29

how can a PR avoid personally having to pay a deceased debts'

Answer 29

advertise for creditors to come forward (no creditors come forward = no personal liability)

Question 30

what happens if there is not enough liquidity in the estate to pay debts?

Answer 30

use powers to sell, mortgage or lease personal/ real estate PRs can use a gifted item to pay debts

Question 31

what is abatement?

Answer 31

the process where the estate is reduced/ liabilities are paid out.

Question 32

what dos S34(3) AEA set out?

Answer 32

the specific order a PR can sell property to pay liabilities.

Question 33

what are the 7 stages of asset distribution order?

Answer 33

STEP 1: Property which is not gifted/ mentioned by the will e.g lapsed and not fallen into residue (PRs can retain to pay any pecuniary legacies). STEP 2: Property not specifically gifted in the will but included in a residuary gift (PRs can retain an amount to pay pecuniary legacies). STEP 3: Money specifically set aside by the will to pay debts STEP 4: Any real/ land gift charged with the payment of debts STEP 5: Money retained to pay pecuniary legacies STEP 6: Specifically gifted property STEP 7: Property over which PR has general power

Question 34

when can the specific order of asset distribution be changed?

Answer 34

if a testator specifically changed this in their will

Question 35

what duty applies to money in a pecuniary legacy in relation to paying debts?

Answer 35

If money in a pecuniary legacy is needed to pay off a debt THIS must be done before being gifted. It does not matter if the beneficiary then receives NOTHING.

Question 36

after a gift is distributed what should a PR obtain?

Answer 36

a receipt from every beneficiary that the legacy was paid/ transferred

Question 37

what can a PR do if they do not know where a PR is?

Answer 37

Advertise intention to distribute Application for a ‘Benjamin order’ PRs can take out an insurance policy

Question 38

what happens if a Benjamin order is issued and the beneficiary 'reappears'

Answer 38

can seek their share from other beneficiaries

Question 39

In practice what is the main resolution when a beneficiary cannot be found and why?

Answer 39

insurance policy (protection for PRs and beneficiaries - allowable administration expense)

Question 40

what is appropriation?

Answer 40

Power for a PR to give a specific item within an estate to the beneficiary as part of the beneficiaries entitlement (part payment of a gift).

Question 41

what is an assent?

Answer 41

transfer of a chattel or an interest in land from PR to beneficiary (transfer of ownership)

Question 42

what must a PR doe if they want to appropriate items towards any legacy / interest / share?

Answer 42

have consent of any person beneficially entitled to the property/ income from it.